XL: Ron and Bob, thank you for agreeing to this interview-it’s great to have Hunter-Dickinson join the Explorer’s League.

BD: We’re delighted to be included.

XL: Everyone knows a little about Bob and Bob, the two men who gave Hunter Dickinson its name, but not so many know about Ron. Bob Hunter is retired, Bob Dickinson is here to answer our questions, and so is Ron. Let’s start with a brief look at Ron’s role in HD.

RT: I have been president and CEO of all the Hunter Dickinson companies since 2001, when I took those titles over from Bob [Dickinson]. We did that because Bob [Dickinson] wanted to be more focused on project geology and engineering, which is really his forte-he is a geologist by profession. Also, I was doing more of the traveling and deal-making, and people making deals tend to want to deal with the president. So Bob and Bob became co-chairs back in 2001, and I took the CEO & President titles.

XL: Your background is a little unusual, Ron. Can you tell us how you started out and what drew you to the resource sector?

RT: I got my Chartered Accountant designation in 1977 and worked in public practice in Canada until 1981. I had quite a few clients in the resource sector, so I was familiar with the industry. I left public practice and got into what I’ll call venture capital financing for early stage resource companies. That’s really what exploration is all about. I was involved in several companies and I met this fellow named Dave Copeland. In 1985, Dave happened to have a company and a project under his wing-the company was called Lincoln Resources and the project was called Mt. Milligan. That’s the thread that started it all. Dave needed some help structuring the company, getting the company financed and getting money to do exploration on Mt. Milligan. I helped Dave do that, helped put the project in a secure financial position, and Dave and I approached Bob and Bob in 1988.

XL: Did Mt. Milligan go on to become a producing mine?

RT: It was the first big transaction for what has become the Hunter Dickinson group. Basically we did a deal between our company (Lincoln Resources), and Bob and Bob’s Continental Gold. By the time the dust settled in 1990, we had sold our company, and our joint venture partner, BP Minerals (a subsidiary of BP Petroleum), had sold the project to Placer Dome for total proceeds of about $268 million.

XL: So, you’re not a late addition to the HD team; you’ve been on board from the get-go.

RT: More or less. There were two different groups — there was Bob and Bob, who are obviously far better known to the marketplace. They got together in 1985, and there were these “lesser” individuals, called Dave and Ron. We maintained a separate, but collaborative, existence until 1994, when we joined forces. That’s when Dave and I really integrated ourselves into the Hunter Dickinson group. The second project we did together was Kemess, through El Condor.

XL: And that was another big one.

RT:Yes. We transacted in January of 1997, for total proceeds of about $170 million.

XL: So, you’re something of a guy behind the scenes-not to diminish your contribution here, but you’re not the rock-kicker, you’re the guy who makes the deals happen.

RT:I’m not the rock-kicker at all. I’ve hung around and worked with geologists and engineers for quite a while, and I can talk a good line. When people ask how I got it, I tell them, “by osmosis.” My professional background is in taxation, mergers, and acquisitions, so I’m pretty good at structuring deals. But let me tell you something, every deal-every opportunity that HD takes or starts, has to be a viable, geologically meritorious project before it comes to my office.

XL: No puff promotion jobs…

RT: No, and we’re not big on moose pasture either. (Laughs)

XL: That’s a given; we wouldn’t be having an Explorer’s League interview if it weren’t so. So, Bob, unlike Ron, you did study geology. What prompted you to do that?

BD: A fluke, really. I was one of those rare high school kids who got lucky and found what he wanted to do very early in life. I loved the outdoors-thought I’d be a park ranger or something. But in grade twelve, in 1966, I got a job with a mining company, and went out in the bush for two months as a gofer. I got to learn how to drive four-wheel drives-and rolled a couple. Thrashing through the bush, getting chased by bears-it was a huge adventure for a young fellow. Then we started finding mineralization, up in British Columbia-in Caribou. The excitement of finding something-huge wealth, like a treasure hunt-that part really turned me on. That’s when I decided to study geology at university.

XL: Did you have any special experiences there?

BD: Sometimes the fraternity I joined would have parties and sometimes we had “Dad’s nights”. I met some of my fraternity brothers’ fathers who were in the financial end of business, and they would often talk about stocks. I happened to invest in a junior mining stock and made $200-300 in a fairly short time. For a first or second-year university student, that was serious money. I loved mining and I like the idea of using geology to find ore bodies. That, combined with the potential market aspects really turned my crank. We studied a lot of porphyry-we had some of the best porphyry copper-gold open pit type deposit geologists at our university, which was the University of British Columbia. Every year, I was out in the bush for four or five months and worked up from gofer, to assistant geologist, to geologist, to project manager. I did a Master’s of Science in finance in ‘74. It all fell into place. A lot of Hunter Dickinson successes have been with these large, open-pit, porphyry copper-gold deposits. I often feel bad for young people today; it’s hard for them to get job experience. I was one of those lucky few; I realized right away what I wanted to do, and I got into it and I did it.

XL: Coming out of school, how did you get going? You didn’t just go out and find Golden Bear while backpacking around and kicking rocks, did you?

BD: (Chuckles.) I worked with some of the major mining companies as a project manager, doing all the logistics and geology for major exploration projects in western and northern Canada. I mainly worked for Cypress Mines, Placer Dome-it was called Placer Development in those days-and with a number of consulting groups that were working for majors. I explored many different projects for many different people.

XL: How did you come to set up your first company?

BD: I started my first company in 1981. It was called DiMac (Sp?). Di came from Dickison, and Mac from MacLaren (Sp?) which was my partner’s name. It turned out to be a real big eye-opener and an education. MacLaren and I had discovered a high-grade tungsten deposit in British Columbia. We decided to go public with it and had to learn how to do that. At that time tungsten prices were at $150 a unit. This is when inflation was huge and markets were boiling. It was a small project, about $3 million in capital costs for a 100-ton per day small pit tungsten mine and mill. We borrowed $2 million from the Royal Bank of Canada, and raised $1 million or so from the public. This was in ’81. We built the mine and the mill. Subsequently interest rates went to 25% on our bank debt, and tungsten prices went from $150 a unit down to about $75 a unit. We got whipsawed. The mine produced well, we got a nice concentrate, but we just couldn’t keep up with the financial aspects of the real world. A mining financier offered us a takeover purchase, but we turned it down because at that time we were building Tech Corp, and unfortunately, a year later the project didn’t work out. We personally didn’t make any money for those 2-3 years of our lives, but we had one heck of an education.

XL: What was the main lesson there?

BD: The lesson was, “Take the check!”

XL: But, it started well and nobody could have predicted the timing of the market…

BD: No. But, bigger deposits have a lot more life. We had a relatively short mine life, around five years. We got into difficulty, then didn’t have enough time to get out of it, so you need to have a deposit that has a 15 to 20-year life. You need large-scale ore bodies, so that if there are difficulties you have time to work your way out of them. That was a good education. Don’t do anything small. It seems like it takes the same amount of energy to do a small mine as a world-class mine. I also learned a lot about technology and mill processing. Up until that time I was a geologist. I was very interested in processing technologies and mining systems, though, so I learned a lot about the engineering and construction of projects. And I learned to take the check.

XL: We can see that you took those lessons to heart. You follow the generative model, but you think big along other lines too.

BD: Right. We’re project-driven, and a project that drives us has to have fairly large potential. We don’t do “ma and pa” things, or industrial minerals. We do base and precious metals, seeking deposits that have large-scale potential. Like Farallon’s Campo Morado, or the Pebble deposit.

XL: We’ll come back to that. So, what was next after the tungsten mine?

BD: I started another company with the same partner, called Trader Resource Corp., and that went on until about ‘85. It was a publicly financed company, working on gold projects in western Canada. Also at that time, there was a company called Breakwater, which Bob Hunter ran. Breakwater found a substantial gold deposit in Wanatchee, Washington. Bob was strong on finance-he really started the European financing of Canadian and North American mining ventures. Breakwater turned out to be a very successful win for Europeans who had bought shares.

XL: How did you hook up with Bob Hunter?

BD: At the time, I was finishing with Trader, and Bob was finishing with Breakwater. A financial group in Vancouver had a company and they needed a technical person who could find mines. That was me. They liked what Bob had done in European financing, plus having his stature of being a mine-finder, on the corporate end, with Breakwater. They asked if we could get together, and we met and thought it was a great idea. So, we took over that company, and used a combination of my technical skills in geology and Bob’s in financial areas. That company was called North American Metals-January of 1986 was when it got started. I identified our first project, the Golden Bear project that Chevron Canada had.

XL: So Golden Bear wasn’t a grassroots discovery?

BD: No, it wasn’t grassroots. Chevron had developed an inferred resource in northern British Columbia. It was fairly substantial for those days-it wouldn’t be today, but it was then-about 500,000 ounces of gold in a high-grade, underground deposit. But they hadn’t driven a tunnel. It was all inferred resources, and they had lost momentum, as majors do from time to time. We went over and agreed to spend $12 million dollars in a few years to earn a 50%. We spent that money in about a year. We drove a mile and a half to two mile long tunnel into the mountain and-say, I remember taking Doug Casey up there! Anyway, we then started permitting the mine and the 100 mile road we had to build. We were one of the first groups to have socioeconomic agreements with First Nations and learned all about that.

XL: How did it turn out?

BD: We were going at it 50-50 with Chevron, and two years after we started, North American Metals was the subject of a hostile takeover by Homestake. This was just after the crash of 1987. All stocks were down, including ours. We were down at around the $2.75 area, coming down off of about $7 to 8. They offered $2.75, but we didn’t think the shareholders should accept that. About a month or two later our shareholders got $5 a share. We had 8 million shares out, so it was a $40 million deal, which isn’t a big deal today, but in those days it was actually a fairly significant deal, another good success for us. It was the first time Homestake came into Canada. They and Chevron went off and built the mine. It produced 500,000 ounces of gold and ended up as Wheaton River, which is now a huge success.

XL: So you were in right at the beginning of…

BD: Right. Our mine, Golden Bear, financed Wheaton River, which ended up with $20 million in the bank. That funding is what attracted the current management to that company. But this was many years later. Homestake bought North American Metals-took all the shareholders out and Bob and I were out of work. So we said, “That felt good. Let’s do something else together.” We then formed a company called Continental Gold Corp.

XL: That was when you ran into Ron and Dave and Mt. Milligan?

BD: Right, 1988. We had a good track record by then. I noticed in the old George Cross newsletter that there was a tremendous porphyry hole-a bulk-tonnage hole, basically 300 feet of oh-seven ounces per ton gold, owned by a company called Lincoln Resources. It was the best porphyry-the best bulk tonnage, disseminated, low-grade hole ever pulled in BC. It was just so attractive. In those days, gold was coming to the forefront. I was very familiar with the bulk tonnage gold deposits in Nevada. At the time, oh-three and oh-four ounces were a big deal.

XL: Had heap leeching been invented yet?

BD: Yeah, it was coming on. For some reason, Lincoln’s stock, on the announcement, went from 28 to 22 cents. So, I went up with Bob and some other people, and we looked at this hole, and there wasn’t another hole within thousands of meters from it. It looked to me like a big disseminated system with lots of potential. I thought it might or might not work out, but it was crying out: “Drill, drill, drill!” So, we cut a deal and took over Lincoln very quickly, which turned out to have a 70/30 deal with a British Petroleum subsidiary. Lincoln had earned, from a very small amount of work-around $280,000 worth of work-a 70 percent interest in the Mt. Milligan property. We drilled our first hole 100 meters out from the discovery hole and boom, the whole hole was well mineralized. So, we grabbed our cojones and went out another hundred meters, and boom! Another hundred meters-boom! Every one of those four holes hit, so we knew we had a major discovery. The rest is history. By 2000, we had drilled 440,000 feet of large-diameter drilling; we were well into the permitting process and were well into finishing the metallurgy and the engineering and mine feasibility work. That’s when we got takeover offers from many companies. The shareholders accepted the $20 offer from Placer Dome. That amounted to about $252 million, of which we got 70 percent. A lot of the fun of it was that people didn’t realize what we had early on, and the stock ended up going from peanuts to essentially $20 a share.

XL: Nice return!

BD: There’s more to it than just that, though. Lincoln’s management joined our group when we took over. Together, we have become the Hunter Dickinson group. We’re a partnership, everyone with different skills. Ron has a totally different set of skills than I do, or Dave Copeland, Mark Regliani, Scott Cousins, Jeff Mason, or Dave Jennings. So, we not only got Mt. Milligan, we got assets like Ron Thiessen, who is quite a brilliant financial guy and deal-maker. That’s where it started.

XL: What was the next big success story after that?

BD: The company was called El Condor Resources, which optioned a property from Kennecott, up in northern BC. It was another gold-copper porphyry, very similar to Mt Milligan. Mark Regliani, Dave Copeland and myself are from about the same era, coming out of UBC, so we all knew a lot about porphyries and were very attracted to the area. Kennecott was another major that had lost momentum. It seems that every prospect has to have four, five, or six outfits work on it before the actual deposit is found. I’m not blaming the majors by any means, but a lot of successes involve things that the majors have been involved with, have taken up the development curve a bit, and then lost momentum on. Then a development group like us will fine tune the search and bring it on home. In this case there was a resource indicated, and then our grassroots exploration in a whole different area-miles away from the original discovery-found what came to be called the Kemess South deposit. Up until that moment it had never been known; it was our drill hole that found the beast. It was a good grade copper-gold porphyry-

XL: Wait-how did that happen? Were you out there kicking rocks?

BD: Not me, but Mark and Dave and the guys. We had a substantial crew of people. It was just knowing that there was a system in there, and doing the right things: geophysical and geochemical surveys, homing in on the target.

XL: So they’re looking at maps and IP, and saying, “Well, the original site looks good, but over here looks better-let’s try a hole over here”?

BD: That’s right. So we started drilling it off, and it turned out to be about 220 million tons of good grade ore, up close to the surface. We got into the permitting process and all the engineering and feasibility and metallurgical work, and so on. In 1996 shareholders accepted a takeover bid by Royal Oak; that was a $170 million deal. Kemess South has turned out to be the second-largest open-pit mine in western Canada. At current metal prices, it’s making obscene money.

XL: What would you say is the most exciting project Hunter Dickinson has going now?

BD: You know, I love them all! When someone asks which one they should buy, I advise buying the group. Each one of our companies diversifies the group-HD is like a mini resource mutual fund portfolio.

XL: Let’s take a quick look at them, starting with Farallon. You’re going to make Campo Morado into a mine, right?

BD: Yes. Not just one mine, but a whole substantial mine district. We have multiple deposits underground, containing, in order of importance, zinc, lead, copper, gold, and silver. We identified Farallon when it was held by the Mexican government. The mineralized district, Campo Morado, had been abandoned, and gone to auction, and a Mexican mining family acquired it. We immediately got together with that family and took control and now own the district-it’s a huge district, not just one deposit.

XL: What’s the total potential value of Campo Morado?

BD: Billions! It’s very hard to say, but we’re talking billions. We have two ten-million ton deposits already delineated. We just released news of a major new deposit that we’ve just tickled with a number of new drill holes. There is substantial grade-it’s still early, and it needs to be drilled off, but it looks like a beauty. We have the thickest massive sulfide intersections that we’ve ever pulled in the district. We’re very hopeful that this deposit will be the one that takes it over the top. And we have many other deposits with three or four drill holes in them. So, it’s definitely billions already-It’s one of the largest massive sulfide districts in the world.

XL: What about the latest lawsuit?

BD: I don’t even worry about that stuff any more. How many times do you have to win the same suit? We’ve won in Canada, in the United States-we’ve got a $600,000 lien on this guy in Mexico. We’re not sure we’re actually in a lawsuit-we announced that the guy had filed some papers-but we’re being much more aggressive now. We hired the best lawyer in Mexico and said, “Here, you deal with it. We’re moving on to build the mine.”

XL: Okay, what’s next?

BD: Taseko’s a good one because it elevates our whole group. Actually, this takeover stuff is sometimes a negative. When we go into a district, for example, we’re very sensitive to the local people. We consult with them early on: the natives, or the small villages, or the chambers of commerce. We think “social licensing” is one of the most important things to do. We do it early on in a project so it won’t go sideways on us.

XL: We’ve noticed that some of the better juniors are like that. But then, if you sell to a major and-

BD: Yes, that’s a problem. And the locals might say, “Look at your record. You get taken over all the time, so we’re not talking to the right people.” So we’re moving away from that. Takeovers have plusses and negatives, depending on your audience. We’ve been involved in many different types of structures and transactions. Part of our history has been these big takeovers, but another major part of our history has been working in consortiums and partnerships, and many of our projects are now being advanced in partnerships, like we’re doing with Lead Corp up at Taseko.

XL: When Taseko’s mill comes online, what’s the projected revenue?

BD: It’s online now, as of just a few days ago. It’s quite an exciting event for our group, because it moves us from being just developers to now being operators as well. We now have our first operating cash-flow from a mine. Taseko re-developed the Gibraltar mine here in British Columbia. It’ll produce 70 million pounds of copper and a million pounds of molybdenum annually. At current prices it’ll provide a cash flow of over $40 million.

XL: Ron, I know you had a hand in structuring a highly unusual deal, getting Taseko started, can you tell us about that?

RT: We bought the project for a dollar, five years ago. We paid one dollar for it.

XL: How did you buy Gibraltar for a dollar?

BD: We got a total of $34 million as well as the mine’s keys. Ron did a brilliant job on that: we got the reclamation funding from Boliden plus cash to hold the project in standby while we waited for the prices to cycle up.

RT: It was a high-cost copper concentrator. And copper was at 61 cents. Boliden originally wanted $15 million for it but we structured the deal so it would be advantageous for them to write us a $17 million check, leave $17 million in cash bonds behind, get one dollar in return, and leave. Then we just had to husband the opportunity until copper prices went back over a dollar. Anybody who thought that copper prices would not recover to a dollar when it was at 61 cents should not have been in the mining business.

XL: Great story! So, HD has been elevated from an exploration & development company to a producer. Presumably, that’s good for shareholders.

RT: Our shareholders will benefit from a multitude of trends. Sometimes a takeover bid happens. The euphoria of a takeover bid is spectacular, but if you can create a company that is cash-flowing, and has a relationship with the world’s number one PGM producer, you can buy assets at a substantial discount. That has to be worth a tremendous value on the stock market. Therefore our shareholders benefit by being able to trade today’s investment tomorrow, for much higher multiples. When we bought the mine for a buck, Taseko was at 28 cents; today it’s at $1.85 to $2.

XL: Very good. Now, let’s talk about Northern Dynasty for a moment. Bob, just how big is the Pebble deposit?

BD: Cominco had an inferred deposit of about a billion tons up in Alaska-another copper-gold porphyry-but they didn’t see much higher-grade material in it. After about two years of negotiating with Cominco, which was a zinc company focused totally on zinc smelters and deposits (though they were about to merge with Tek Corp, a more diversified company), we were able to close the deal. We optioned the Pebble project from them, just at the bottom of the copper market-copper was at 61 cents. At that time, it had about a billion tons of iffy geological resources. We went up to Alaska and found that the deposit had a lot more potential, even for more high-grade ore than was estimated. We’ve drilled it and found 2.7-billion tons of deposit-so far. It has 26.5 million ounces of gold and 16.5 billion pounds of copper. That was a third-party resource estimate completed in February 2004, based on Tek-Cominco’s historical drilling and our drilling last year. It’s a monster deposit, very broad-3 km by 2 km. And in that 2.7 billion tons we found 435 million tons of higher-grade material, sitting right up at surface. It has low stripping ratios and a lot of good characteristics. That means a rapid payback of capital, and other things you need to have a successful venture.

XL: Will you do this in two phases, then, using the higher grade deposit at surface to finance the bigger project?

BD: That’s possible, but we’re a long way from that. To answer your earlier question, Pebble is the largest gold resource in North America. At the same time, because it’s a copper-gold porphyry deposit, it’s the second-largest copper resource in North America. So, over the last few months, we’ve been looking at infrastructure: road, port, power, metallurgy, geotechnical characteristics-all the components of a mine. We’re spending $33.5 million on all this work and all of the key elements for a major mine are falling into place. We’ve been drilling all summer long with six rigs and there will be a new resource estimate completed by third parties here before Christmas. The drilling is moving more of the resource from inferred into measured and indicated categories. We’re gathering all sorts of socioeconomic and environmental information-we’ve opened offices in Anchorage. We’re going to be tabling a bankable feasibility study in 2005.

XL: How about Anooraq?

BD: Anooraq is working on many different mining projects. One is called Prince. We initially went into South Africa to look for PGMs in the Bushveld Complex. The Bushveld Complex is the center of the universe in terms of platinum and palladium-about 80% of the platinum production in the world comes from there. We realized there was one part of the Bushveld, the northern limb, that had potential for open-pit mine technology. We went in there and acquired ground immediately to the north of the only open pit platinum-palladium mine in the world-or certainly in South Africa. Typically the South African platinum mines are big, narrow, underground operations. We wanted to bring not only capital from North America into South Africa, but also open-pit mining technology, which Americans and Canadians are very familiar with. We don’t like to get our hands dirty; we like to have big trucks shovel things around and drive costs down to low levels per unit. It’s all in the unit cost. The grades in the northern limb aren’t as good as the grades in the underground mines but they have big widths. You can mine sections of the Bushveld in an open-pit configuration and the margins are better.

XL: So, did you find anything?

BD: We acquired a large prospect from a junior finder, as I said, just north of Anglo Plat’s open pit Sandsloot platinum mine, and we’ve been developing it. We’re in pre-feasibility on a large platinum resource-the last announcement was of about 4 million ounces. We’ve been drilling there with multiple rigs for well over a year, and I’m sure we’ll be making a resource statement in the months ahead of considerably more than 4 million. We’re now partnered with Anglo Platinum on our deposit. We have an agreement whereby we could potentially use their infrastructure-their milling, their smelters, etc. Anglo Platinum is the sixth largest company in South Africa, and we’re working with them on many initiatives, thanks to Ron. We’re also working on a project called Ga-Phasha. It’s a large-scale, more typical high-grade, narrow-width underground platinum project that’s in the eastern limb of the Bushveld. It’s got 30 to 40 million ounces of platinum resources.

XL: Ron, we understand you have achieved something almost miraculous down there, getting all the pieces put together for a Black Economic Empowerment company. Can you tell us about it?

RT: Sure. Let me go back a little because it didn’t start out that way. Black Economic Empowerment is something that arose given an opportunity, about two years ago. Originally, when we decided we wanted to be in the PGM business, we went looking for PGMs in various parts of the world. We conducted exploration activities in the Raglan area of northern Quebec, the Fox River Hill district in northern Manitoba and in Brazil. We found some things, but they didn’t meet the hurdle rate. Ultimately we decided that if we’re going to be in the PGM business we have to be in the Bushveld, as Bob said. So, we went and talked to all of the three major producers and determined that Anglo Platinum controls 80% of the Bushveld. We could have done business with the other two but they didn’t have an inventory of projects. We went about a concerted 2-3-year effort of getting to know Anglo Plats and convincing them of the merit of doing business with us. Simplistically, that business plan was: the laws are changing in South Africa and we know what the laws are changing to because it’s a bunch of Canadian people who are helping to write them. Anglo Plats had many grassroots properties we knew-and they knew-they would not get to explore, because they would have to kick them back to the South African government. We convinced Anglo that by doing an exploration joint venture with us on these properties, they wouldn’t have to be given back.

XL: What did Anglo Plats say?

RT: They gave me a cold cup of coffee and told me that when I was finished, I could leave. They didn’t realize that I’m a Mennonite and that Mennonites enjoy cold coffee. So, I thought it was a bit of a luxury and an invitation to treat again. Two years of relationship-building finally broke the ice, and we did our first exploration joint venture. We decided to deliver in spades; we did five years’ worth of exploration in one, which is a Hunter Dickinson trademark. Anglo Plats was astonished.

XL: What do you mean by doing five years of work in one?

RT: Typically, the thing in South Africa was to get one drill rig out there, drill a couple of holes on 200-meter spacing, or even 1-kilometer spacing, and that would be good for the next year or two. We put two drill rigs in and worked 24/7 for six months. They said, “That’s amazing-we didn’t even know South African drill contractors would work around the clock!” We’re different because our shareholder base wants to know: “Is it a mine? And if so, how soon can you develop it?”

XL: They want news-a flow of news.

RT: Exactly. So that was the first one. We ultimately ended up with four joint ventures with Anglo Plats, and between numbers three and four Anglo Plats themselves ran into a problem with their Black Economic Empowerment strategy. That strategy had been put together five, six years ago. It so happened the guy I was working with was instrumental in putting together that original strategy, and was now trying to implement it. Because they were running into difficulties, and we we’re talking about the different approaches to business and opportunities, I was introduced to the empowerment partners that Anglo had, and we had a brainstorming session. That happened in November of 2002.

XL: And since then …

RT: It took close to a year for us to really come to terms with empowerment and black opportunity. We put a proposal before the empowerment consortium, which they really liked. We worked with a couple of senior guys on the consortium, on a strategy of creating a company which is, by definition under South African law, a Black Economic Empowerment company, yet is listed on the North American stock exchanges. That’s important. Black Economic Empowerment is an opportunity that is being given to black entrepreneurs in South Africa at very advantageous prices and terms. It’s legislated. What’s missing in that opportunity is venture capital. And what’s the greatest venture capital market in the world? The North American equities market. If I can draw an analogy, it’s like Steven Jobs, sitting in his garage in 1979 tinkering with the concept of an electronic desktop computer, thinking, “Where am I going to get money to actually manufacture this?”

XL: Sounds like it was an uphill fight.

RT: Everybody-not most people, but everybody that we discussed this with in both North America and South Africa-said, “This is an excellent opportunity, but it will never happen. You won’t get South African Reserve Bank’s approval and Anglo Plats will never negotiate this joint venture with you.” But we had prior history, because of another deal that we’d done that got startup approval. Also, we’d been meeting with the South African government. We knew the capital South Africans had invested in Black Economic Empowerment. We knew that if we put the structure together well enough, that the personal capital of all those people would overcome any hurdle the South African Reserve Bank could put up. And because we had Anglo alongside from day one, I myself had no doubts that we would get to a joint venture. We got startup approval in June-early July of this year, and we just announced the JV with Anglo here the other day.

XL: What’s next for Anooraq?

RT: We move the company into production, sooner rather than later. The property our Pelawan merger brought is a very advanced property. And for Anglo Plats to move to large-scale production, their Black Economic Empowerment initiative has to be successful. And we are that initiative. So there’s a huge incentive-they’ve built a half-billion dollar smelting complex, they’ve put $250 million into the mine next door.

XL: How does this fit into the overall Hunter Dickinson strategy?

RT: We are a mining company, whose particular expertise and focus has been on exploration-really, it’s advanced exploration and engineering with an idea of taking properties to the point where they can be put into production. Not necessarily by us in the past-but we do have other producing operations, like Taseko.

XL: Excellent. Bob, can you tell us about Great Basin?

BD: Great Basin is our gold vehicle. It has two large-scale gold projects. One is in the Carlin Trend, which is North America’s most prolific gold belt. We have a partnership on a very high-grade, underground gold vein project with Hecla. We made the discovery-it’s kind of interesting because Newmont had this property originally. They were looking at it as a bulk-tonnage, disseminated, low grade open pit up at surface. Our team had a geological theory (it didn’t come from me) that this huge low-grade body had a feeder system. We drilled a huge amount of holes before we locked onto it, but it did turn out that there’s a high-grade vein feeder system below the bulk-tonnage mineralization. It was a classic deal where there were one or two old holes that hit high-grade-you know, one ounce gold material in them over 5-6 feet. We said, “That’s indicating a feeder system.” We now own the whole thing, but turned around and invited Hecla to the party, because they’re a well-established underground mining company. They have a solid reputation of being very proficient in high-grade underground mining. They’re earning a 50% interest by going underground; they’ve now permitted an underground decline to the veins and they’re driving a tunnel to get to the high-grade veins right now.

XL: What’s the ounce potential there?

BD: 200,000 ounces of gold annually. Currently we have a million ounces of high-grade resources open in all directions. When Hecla gets the tunnel into the veins we’ll get a better feel of their shape and geometry. It’s quite exciting. And now that Hecla is in the driver’s seat-we’re part of the management, but not currently conducting operations-we decided to get another gold project for Great Basin. We want Great Basin to be a mid-tier gold producer, so we acquired a substantial gold project in the Witwatersrand Basin of South Africa. It’s the number one home for gold in the world; it’s produced over 2 billion ounces of gold, whereas the Carlin Trend is the best in North America, but has only produced a hundred million ounces. It’s like the Bushveld is for platinum. We have multiple rigs drilling a very sizable resource, and have discovered a whole new gold field in the basin called Burnstone. We’re now in pre-feasibility, heading toward feasibility stage.

XL: A lot of people have been crawling over those rocks for a long time; how did you come up with something others didn’t notice?

BD: I guess we had the wherewithal. It was a group of Goldfields geologists who presented the project to us. They had always liked the area for its potential, but Goldfields didn’t want to go ahead. Once these guys were on their own, they acquired the ground and brought it to our attention, arguing that any gold there would be much closer to surface than usual. Most of the underground gold mines in Witwatersrand are 1,000 to 3,000 meters below surface. Our guys thought there might be some folding or other structural complications which would bring the reef up closer to surface. It was faulting that brought it up, actually, but the idea that it could be closer to surface proved to be true. The potential was shown to us, but it was our group that believed in the possibility, financed the possibility-our group that made it happen. We’ve been drilling all year now with five rigs and have a very large gold resource, a whole new gold field.

XL: Now, Pebble is a gold property too. Why isn’t that part of Great Basin?

BD: It’s a porphyry-it’s diversified, has both gold and copper. It’s in Northern Dynasty, where it should be, because you need to have one company focused totally on one thing when it’s so big and important.

XL: Is that why do you have so many companies: because it helps focus the people working on the projects? Or is it because it helps the investors understand the projects?

BD: Both reasons. Each of the companies is focused on a jurisdiction or a type of deposit. We find that some investors may not want to go into Mexico, or South Africa. Or they don’t like PGMs, or want to be in base metals, but not precious metals. And it helps our own staff stay totally focused, drive it home, and make it happen.

XL: How about you, Ron, which HD companies do you like best?

RT: That’s a question I’m always faced with. You have to understand that every project has very different parameters. They’re best suited for different investors. So, what is your risk profile? Maybe you aren’t interested in taking on permitting, engineering, and time-related risks, but you want to be in a copper project. Then your best project is Taseko, because it’s going into production today.

XL: Most of our readers are speculators; they’re not necessarily looking for an investment that will build a portfolio for their retirement. They’re looking for something that may be undervalued now and has a lot of potential, not necessarily tomorrow, but in the short- to mid-term.

RT: I think the three that are in-house that are least understood by the marketplace are Anooraq, Continental Minerals, and Northern Dynasty.

XL: What about Amarc?

RT: They’re you’re betting 100% on Hunter Dickinson; there is no defined asset today.

XL: We understand that Amarc has people in the field and are making decisions about which properties to proceed with. Is that going to happen anytime soon?

RT: Likely by year end. There are at least four properties that we’re actively working on right now, so it’s just a matter of which one we’ll focus on going into the new year.

XL: What about the group’s strategy looking forward? Where is Hunter Dickinson going?

RT: We’ll concentrate on exploration engineering-advanced projects-and moving them into that realm where they’re developable, and then transacting. Joint venture, takeover bid, production financing, whatever is necessary to deliver the next level of value. It’s one thing to say you’re an exploration company and you’re going to buy a bunch of exploration properties — what is your strategy? Some people call it an exit strategy, but I look at it as a future strategy: how are you going to deliver better value in the future? Takeover bids are nice, but they are few and far between, and if you walk into a major mining company’s boardroom and say, “I need a takeover bid,” you won’t even get a cold cup of coffee. You have to be able to have a viable strategy that will see this asset create value for shareholders, and sometimes those things have to get into production to create that value. How are you going to get into production? Joint ventures, production financing, all of these things-and you have to be competent at doing all of those things. Hunter Dickinson’s forte is not being locked into a myopic strategy of “discovery and let’s get out.”

XL: Gotta be flexible.

RT: You have to be strategic.

XL: Is there a single strategy statement or paragraph that would summarize Hunter Dickinson’s strategy?

RT: Exploration to production-we will deliver shareholder value.

XL: How do you minimize value dilution when you do financings?

RT: We’re usually pretty good. We’ve done financings, monetization of tax pools, certain kinds of limited partnerships. My best example is the very first limited partnership financing we did on Taseko. We could have done a straight-up financing for $6 million at $1.60 a share, probably with a warrant, but we would have suffered about 4 million shares of dilution. We did a tax-incentivized transaction for the investors, and ultimately delivered shares to them at about $2.80 a share. Our dilution was less than half, and we didn’t have to give out warrants.

XL: Was that flow-through funding?

RT: It wasn’t flow-through, because you can’t flow-through advanced projects. But we have, on occasion, given people the equivalent of flow-through funding for very advanced projects. We just did one to raise the startup capital to restart the Gibraltar mine. We got $17 million by way of a tax-incentivized offering. They got the equivalent of flow-through, but their money went into startup financing.

XL: So, what we’re hearing is that you are very careful about shareholder value, and we’ve heard that throughout this interview. It isn’t about playing with big dump trucks and kicking rocks at someone else’s expense for you-it’s about creating shareholder value.

RT: Exactly. Sometimes you have to suffer dilution to protect your assets. But, because we are shareholders too-the Hunter Dickinson principals’ primary source of our wealth is the shares they own in these companies-every time we dilute, we dilute ourselves. We’re very cognizant of the effects.

XL: Since you have production revenue now, do you ever plan to pay dividends?

RT: We’ve only just started production on Taseko, and we’ve got a different strategy. We believe that right now, we’re better off to invest our free cash flow over the next 40 months into a couple of new projects that will deliver greater shareholder value than a dividend stream would. We’ve looked at what a dividend would do to the stock compared to building a hydrometallurgical refinery on site.

XL: Very interesting. Let’s switch gears here. Our readers would be interested in your thoughts about the economy and how it might affect the resource sector.

RT: Extreme analysis is almost impossible to deal with, because there are so many variables and so many possible outcomes. The greater the stability we have going forward, the easier it is to measure what will happen. If the status quo is maintained, China will boom. India will boom. Asian economies will continue to buy U.S. dollars and finance the Fed, and the U.S. will continue to grow and purchase all their goods. That is, without doubt, the best outcome we can have, because it’s growth all around. However, there are oil price issues out there, there are terrorism issues out there, the U.S. trade deficit and fiscal deficits are growing, and we have to be cognizant of those things.

XL: What do you think the impact of economic fluctuations on a company like yours might be?

RT: I believe that we’ve had a sectoral change. This isn’t a cyclical thing that’s happening right now, although there are always cycles. Commodities will always go through cycles, but there’s also sectoral change. Today’s sectoral change is that we’ve moved from an age of constantly declining commodity prices to an age of a long-term commodities bull market. With stability that climb will be a nice 45-degree angle-but within that long-term, 20-year bull market for commodities, we’re going to have cycles of metal prices going up and down. For example, I don’t think we will see $0.61 copper again in my lifetime. When we had that long-term bear market in commodities, copper regularly touched $0.75. I think now we’re going to see that the long-term price of copper is going to establish new highs, new higher averages. In the 1990s the average price of copper was about $1.03; I bet for the next ten years the average price of copper is going to be $1.15-$.120. That is a huge change.

XL: While demand keeps increasing.

RT: Right. Next year the electrical industry-and that’s just the distribution of power-in China will consume 500,000 tons of copper. And, do you know much copper is required just to feed the automobile sector for growth in automobiles in China? It’s huge. Every car has about 55 kilos of copper in it. I believe they’re adding between 1 and 2 million new cars a year to China alone. We’re not talking about a mature economy where they’re recycling a lot, like in Europe or North America. We’re talking about an economy that is growing. By 2015 or 2020, China will have more cars than North America. Talk about hybrids; hybrids are great! They have much more copper in them.

XL: What about your take on the current general economic and geopolitical situation around the world, Bob? Have any thoughts you can share with us?

BD: Yes. I just came from a luncheon with John Crow, a former governor of the Bank of Canada. He went through the economic outlook. People here in Canada are feeling that the US dollar-with the debt and the deficit building, baby boomers aging, etc.-will further weaken. That’s good for the Pebble Project, which is in the United States. Canadian companies shipping metals offshore sell in U.S. dollars, so it’s probably a negative for them. I’m sort of a goldbug, and the former governor and I both believe that gold will continue to strengthen. I’m not a metals analyst, I’m a geologist, but all the people I read are talking about China and the U.S. slowing down moderately, but there’s no crash. They’re saying we have good commodity prices; they may come off a little bit but generally it’s a new era in commodities with China growing, and India behind it. Like Ron, I believe there’s been a structural change to base metals pricing, because of the huge new demand. It may not be flat-out like it was six months ago, but there’s still a huge new demand from a whole new sector of the world. I think we’ll also see a continuing rise in the gold price-this is going to be a good year or two for mine developers.

XL: One of the things that we’ve noticed, for example, is that gold is rising against the U.S. dollar, but it isn’t rising against the rand or other currencies. Do you think it will rise more globally?

BD: Personally, I see the rand weakening over time. I thought the Canadian dollar was undervalued at $0.61; traditionally it’s been around $0.80. My feeling is we’re going to hang in around here for a while. With China and India coming on, the whole restructuring of base metals pricing means we’re in for a good run. I don’t see it going excessively higher; I’m not looking for higher base metal prices. The current ones are creating obscene profits in some producers like Phelps Dodge and Tek-Cominco, so money is just pouring into mining. This will carry on for quite some time.

XL: So, it doesn’t need to go higher; it’s still significant if we’ve reach a new plateau.

BD: That’s exactly right. I see it maybe easing off a bit, but prices are so good, relative to historical averages. So if this is indeed a structural change, we’re in for a long revaluation of mining companies-especially groups like us that have development-stage mines coming on stream in all our companies. Because there are very few new discoveries, very little exploration in the past ten years (because of the low metals prices), the jewels in the crown are these new discoveries that have moved up into the advanced feasibility stage. And almost all our companies have a world-class asset of that status.

XL: Hopefully Amarc will soon, too.

BD: Indeed. Amarc is going to find the next major mine in British Columbia. It has a two year plan and lots of money to do it-$12 million of financing. It has some of the best geologists, 100% fully focused and employed. We have almost every geophysical contracting company in British Columbia in the bush, consulting on and staking numerous projects for us as we speak. We have just acquired 840 claims. We have the desire, we have the knowledge base, we have the money.

XL: We’ve simply been telling our readers: “Look, it’s Hunter Dickinson.”

BD: That’s right, it’s a bet on Hunter Dickinson. (Laughs.) But it’s not just a bet on getting some money together-all of that’s in place. It’s a low-risk bet because it’s already financed, and it’s got mine-finders who have already found many mines, including Mark Regliani, myself, and other people-a dedicated team to make it happen.

XL: What about energy? Is there any interest at HD in starting an energy company? With oil prices going where they are …?

BD: Not at this point. We want to focus on the current batch of assets and bring them home, capitalize on the projects we have now.

XL: Do you think, if these trends continue and these projects are sewn up more, you might start a company to look for uranium?

BD: Uranium would be something we’d look at, sure. We do look at occasional uranium prospects-we get hundreds of submittals every year, from consultants, mining companies, and majors. If we saw a uranium project we really liked, we would go after it, but it’s not something we’re actively sending people out looking for. Our focus is to get the job done with the companies we’ve talked about.

XL: One last question we like to ask our respected people in the industry. People would like to know what other companies are out there that you think are doing a good job, in addition to all the HD companies of course. Ron, who else might you buy for your stock portfolio-what other companies are doing it right?

RT: I like anything to do with the Lundin group. I think they’re very close to what we’re doing; they’re looking for hard assets in the commodity industry, trying to acquire assets that are undervalued. They’re very good at that analysis, and they’re also very good at translating that into shareholder value.

XL: We agree. Anyone else?

RT: After that, I start getting into producers and that’s different. I like the Altius guys, and some of the other other quality operations that are out there.

XL: How about you, Bob? Who do you look at and say, “There’s a real mine-finder”?

BD: Ross Beatty, Ron Netalinsky, Duane Poliquin. For the companies, I like Tek Cominco-for a major mining company they have a good way of doing business, getting in first, and working with junior mining companies. They have a good philosophy.

XL: We ask these questions a lot, and you’re the first one to mention one of the major companies.

BD: Well, the company I mentioned, they have a long history-for example, the diamond fields, they got in early. Bob Frieland brought that on, but most of their mines were obtained through inventive deals with junior mining companies.

XL: Of those junior mining companies, which are your favorites?

BD: I like us. (laughs)

XL: Any final words of wisdom?

BD: I think we’ve waxed eloquently for too long already. (Laughs.)

XL: Well, thank you very much for your time and your thoughts, Bob and Ron.

BD: Thank you.

RT: Thank you.